Royal Commission questions Dover client protection


Just minutes after being warned by Royal Commissioner Kenneth Hayne about the implications of his company’s documents possibly being regarded as “misleading and deceptive” Dover Financial Planning principal, Terry McMaster, collapsed in the witness box and ambulance paramedics were called.
McMaster’s collapse came amid questioning by counsel assisting the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry, Mark Costello about whether a document, Dover’s Client Protection Policy, used by Dover was intended to protect the company rather than its clients.
McMaster agreed with Costello’s assertion that the document represented “a Dover protection policy” but said it also contained clauses which increased his firm’s liability and cited damages which might flow from a breach of the compliance processes.
McMaster also agreed with Costello that many aspects of the document were unenforceable stating: “I think that could be the case now, yes”.
That response prompted Royal Commissioner Hayne to intervene to suggest to McMaster that the document might itself be “misleading or deceptive” and to caution him about how he answered because it “might draw attention to relevant provisions of the ASIC Act about making misleading or deceptive statements”.
McMaster agreed that the document was likely to be ineffective in the context of the Financial Ombudsman Service (FOS) and added that while the company was aware that some of the subclauses could be struck out, “there would be other circumstances where, in certain situations, there wouldn’t be a striking down”.
Asked by Costello whether Dover’s attitude was to seek the maximum protection it possibly could, McMaster answered “yes”.
Asked if it turned out that some of the provisions in the contract were unlawful, “then so be it, and it was worth trying?” McMaster said: “I think that’s, you know, part of it, yes”.
Recommended for you
ASIC has released the results of its first adviser exam to be held in 2025, with 241 candidates attempting the test.
Quarterly Wealth Data analysis has uncovered positive improvements in financial adviser numbers compared with losses in the prior corresponding period.
Holding portfolios that are too complex or personalised can be a detractor for acquirers of financial advice firms as they require too much effort to maintain post-acquisition.
As the financial advice profession continues to wait on further DBFO legislation, industry commentators have encouraged advisers to act now in driving practice efficiency.